Face-To-Face With Lockheed Martin’s New CEO

AW&ST: Is any executive really ready for the kind of position you're going to step into on Jan. 1? It came like a bolt from the blue.

Hewson: Let me give you a framework of how well I have been prepared. January 31st will be my 30th anniversary with Lockheed Martin. I've had 19 different leadership positions, worked in three of the four business areas and had six years at the corporate office. I have been running the largest business area for the corporation—Electronic Systems—which has all the elements of a chief executive, except that of running a public company. So I've been directly engaged in formulating the strategy for the company with [Chairman and CEO] Bob Stevens and [CFO] Bruce Tanner and the executive leadership team. In April, when I was named to move into the president-COO role and Chris was named to be CEO, I was transitioning to help him be the most successful CEO he could be. So I had been thinking since April about what he needed to do to get ready. We just adjusted the transition process a bit in this last month. I'm ready.

The defense industry had a good run during Bob Stevens's tenure as CEO. You're taking over just as it seems the market is going south. That has got to be daunting.

I look at our portfolio and even with downturns there is still very strong demand for the products and services that we provide: tactical aircraft, air mobility, rotary wing, defense and commercial satellites, the Orion space capsule, cybersecurity, irregular warfare and ground vehicles. I accept that we may not see the same trajectory of growth in defense budgets in certain regions of the world, including the U.S., but there are regions where defense budgets are increasing. Right now 17 percent of our sales are international, and our intent is to grow our non-U.S. business to 20 percent in the next few years. We see a lot of growth in the Middle East and Asia- Pacific, and we still have strong footprints in the U.K. and Australia. We will continue to grow as a company through this cycle of business.

Is that 20-percent goal conservative or a stretch?

I plan to exceed it. But remember that there is still domestic demand for our products and services. When you look at the elements of the new defense strategy that was rolled out by Secretary [Leon] Panetta, it is right in line with our portfolio and what we provide. The F-35 is recapitalizing a lot of other fighter programs, but it also brings unique capabilities for the U.S. and our international partners. It will be a big element for us, both domestically and internationally.

On the subject of the F-35, it is about $21 billion over budget and as much as eight years behind schedule.

It is the largest and probably the most complex development program ever. The flight-test program is going extremely well. We are ramping up production, and we're knocking down the inevitable technical challenges, including the software. Those are all things that are not insurmountable. We are also driving down the cost of the program as we move down the learning curve.

Where are you on the F-35 software?

We're well along on the software development and testing in labs and flights. We're moving through the various blocks of software updates. We delivered the latest version several months late. However, we have worked with the Joint Program Office to re-baseline the Block 2B schedule and are now on track to deliver the next software release in January. We're making good progress.

There are reports that Canada and Australia, two of the staunchest F-35 partners, are starting to have second thoughts because of the cost and delays. What do you say to those nations to keep them on board?

Canada and Australia are very smart, savvy buyers. They're going to constantly look at, 'Where are my requirements and what do I need?' I think the F-35 certainly brings them unique capabilities. As I've said, we're progressing well and bringing the cost down. So frankly I think it's the best choice for them as they move forward.

So you're confident they can be kept on board?

Yes. This is a capability that they need. As the Canadians go through their evaluation process, I expect the F-35 will prevail. And Australia hasn't said it's not going to buy the F-35—it is a timing issue for them.

Should Lockheed Martin do more to improve its risk management?

I think we have a well-tuned process for risk management and program management and [identifying] early warning signs. I would welcome anyone to look at our process. We're performing very well on the majority of our programs. We track technical challenges, costs, schedule, all those elements, from the lowest level all the way up to my level. As I look at how we're performing on our programs, I have never seen better.

So do you think your company is getting a bad rap because so much attention is focused on the larger-than-life Joint Strike Fighter?

Our responsibility is to perform on our part of the program. If we're not, then we need to step it up. We accept full responsibility for that. When we make a commitment we need to meet it, and if something is not going well we're going to put resources on it and fix it. We're going to be there all the way through with our customer.

In 1983, when you were a twenty-something engineer starting out at Lockheed Corp. in Marietta, Ga., could you have imagined a woman running a leading defense company and that you would be one of two—along with Phebe Novakovic at General Dynamics—to shatter that glass ceiling?

When I came to Lockheed as a senior industrial engineer I wasn't really thinking about that. I was excited to join that company. I grew up in a family of patriots—during World War II my dad worked for the Department of the Army and my mother was a nurse in the Women's Army Corps. My brother went off to serve during the Vietnam War. So I kind of had a sense of patriotism around Lockheed. When I went to interview there and saw all those aircraft down at the production line—they had C-130s and C-141s and had just won the contract for the C-5B—my mindset was not about whether a woman would be running a defense company. They had a value system and innovation and excitement. I was just in awe.

There is a perception that the A&D industry should be making a more concerted effort to reach out to women. Do you agree?

Three of our four business areas are run by women and 25 percent of our workforce is women. You're right, 30 years ago there weren't as many. Now you're seeing it in the armed services and in defense companies. Professionals are getting experience, performing, moving up and competing for jobs. I competed for my job, as did my other colleagues. It's not about gender. That's how I view it. I went into leadership very early in my career—I was a supervisor 18 months into the job.

How are you going to be different from Bob Stevens and make your mark on the company?

We operate as a leadership team at Lockheed Martin. It's not about Bob and the rest of us just sort of following behind. He's a very inclusive leader, and we all work together on our strategy and focus. I think what will be different is the environment [in the industry]. I will, with my team, focus on how we continue to grow the enterprise and what it means in the changing environment we're in. What areas do I need to put more emphasis on? What areas do I need to retreat from?

What are some of the biggest challenges you've faced in your 30 years with the company?

On my first management job I had to lay off 25 percent of my staff in industrial engineering because a program came to an end. And I remember how gut-wrenching it was for me to sit across a table from those individuals and tell them they didn't have a job, not because they weren't performing but because of business conditions. That taught me early on how important it is to be looking beyond a day and constantly focusing on growth. Recognize that you have to do the contingency planning and keep a bead on what's going on in the environment so that when you have to let somebody go on one program, you hope to win another and bring them back. I was running a [unit] where the flagship program—the Presidential helicopter—got canceled. And I had to take out 1,000 jobs. That element of our business is growing again. We build the MH-60 Romeo helicopter out of that site in Owego (N.Y.) and we're delivering 33 this year.

Can you foresee Lockheed Martin at least maintaining its current level of R&D investment, as opposed to drawing it down?

We're looking at all elements of cost. For the past three years we have been focusing on our capital expenditures, overhead expenses and facilities footprint. Three years ago we were at about 146,000 employees and we're at 120,000 now. I run Electronic Systems through the end of the year, but I'm not replacing my role because we're flattening the organization and merging three companies into two. Flattening has allowed us to take cost out. But we still are going to stay focused on training our teams and investing in R&D that is going to allow us to continue to grow the business.

Marillyn Hewson

President (since November 2012) and CEO (effective Jan. 1, 2013)

Age: 59

Birthplace: Junction City, Kan.

Education: Bachelor's degree in business administration and Master of Arts from the University of Alabama.

Career: Hewson joined the old Lockheed Corp. in 1983 as a senior industrial engineer and has risen through 19 management positions, including president and chief operating officer and executive vice president of the Electronic Systems business.

When Lockheed Martin announced in May that Christopher Kubasik would be its new CEO effective Jan. 1, 2013, it promoted Marillyn Hewson to succeed him as president and chief operating officer. And it was a safe bet that Hewson would cap her long career at the company in that No. 2 spot, given that Kubasik was just 51 years old and likely to hold on to the CEO job for a long time. But Lockheed Martin's carefully scripted succession plan blew up in November when Kubasik was forced out for having a “close personal relationship” with a subordinate and Hewson was designated as the next CEO, replacing retiring Robert J. Stevens. She had 53 days to prepare. During a December visit to Aviation Week's Washington bureau, Hewson sat down with outgoing AW&ST Editor-in-Chief Anthony L. Velocci, Jr., and incoming EIC Joseph C. Anselmo to make the case for why she is ready and how she plans to keep Lockheed Martin growing in a challenging defense environment.